CPAG Scotland says budget 'locks in poverty-producing cuts'

Lower income families continue to shoulder burden of austerity under current UK government policy, says a leading anti-poverty agency.

Family living standards face continued crisis as the ‘cost of a child’ rises faster than wages, inflation and family benefits, Child Poverty Action Group (CPAG) in Scotland suggests.

Responding to the UK chancellor's statement on 19 March 2014, John Dickie, the head of the CPAG Scotland said: “This Budget locks in misguided policies that are already set to push up to 100,000 more children into poverty in Scotland alone.

"The Chancellor's so called 'cap on welfare' introduces a rationing of basic support for children, working families and disabled people. It ties the UK government’s hands on some of the most effective actions it can take to reduce child poverty, locking-in cuts for the poorest families in Scotland and across the UK. What children really need is the same protection that have been given to pensioners".

In response to increases in the personal tax allowance Mr Dickie pointed out that: “Raising the personal tax allowance does little good for many of the lowest paid workers. Many don’t pay tax anyway, while others keep just 15p in every extra pound because in-work benefits like housing benefit get withdrawn.

"Our call to increase housing benefit earnings disregards, so they get the same full gain as higher earners, has yet again fallen on deaf ears."

The Child Poverty Action Group's disappointment comes after analysis it published on 18 March highlighting the risks of the Chancellor’s new Annually Managed Expenditure (AME)spending cap.

The analysis, commissioned from the Institute for Social and Economic Research (ISER) at Essex University, showed how the budget announcement on capping AME could drive up UK child poverty rates.

The ‘AME cap’ sets an annual ceiling on overall spending for working age support through tax credits and benefits for low paid workers, carers, disabled people and single parents.

The analysis shows that income transfers from this kind of support are an essential part of preventing high poverty rates in the EU countries with the lowest child poverty.

It also illustrates that the UK leaves tax credits, social security and family benefits to do much more of the heavy lifting than in other EU countries where progressive taxation and structural factors of the economy play a larger role.

Mr Dickie added: "All the EU countries with much lower child poverty rates than us use income transfers for poverty prevention. If they can do so much better for their children, then so can we.

"Instead George Osborne’s budget reveals how the poorest families are the worst affected by the government’s austerity measures. His fiscal strategy could be called ‘The Great Regression’, given how the poorest are so hard hit compared to most of the wealthier half of the population.

"The legacy this government is set to leave is of rising child poverty and budgets that have made the poor much poorer, whilst actually making many wealthy people even wealthier still.”

The Chancellor's announcements also included tax cuts for people earning up to £100,000 a year, a commitment to cap welfare, while giving increased subsidies to wealthy aviation and oil companies.

Patrick Harvie, Green MSP for Glasgow and Co-convener of the Scottish Greens, said: "Wages are down, people are taking out loans to pay for everyday items, and Scotland's biggest foodbank is struggling to keep its shelves filled. As poverty becomes embedded in society we see Tories and Libdems gloating over their Dickensian decay, with Labour offering to finish the job.

"These are desperate diversionary tactics – flashing a thruppenny bit and tweaking bingo tax – make it clearer than ever that we have a Westminster elite laughing as they gamble with people's lives. We need to take control and build a new economy that works for the many not the few, and we have a chance to do exactly that by voting Yes to independence in September."

* Research on child poverty impact of the social security spending cap: http://www.cpag.org.uk/content/new-analysis-highlights-child-poverty-risks-chancellor’s-new-spending-cap

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